Investment
Offering Introduction Giving investors access to a pipeline of energy and
power investments This is neither an offer to sell nor a solicitation of an
offer to buy the securities described herein. An offering is made only by the
prospectus. This sales and advertising literature must be read in conjunction
with the prospectus in order to fully understand all of the implications and
risks of the offering of securities to which the prospectus relates. A copy
of the prospectus must be made available to you in connection with any
offering. No offering is made except by a prospectus filed with the
Department of Law of the State of New York. Neither the SEC, the
Attorney-General of the State of New York nor any other state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.

Investment
Offering Introduction FSEP Risk Factors An investment in common shares of FS
Energy & Power Fund involves a high degree of risk and is considered
speculative. A more detailed description of the risk factors is found in the
section of the prospectus entitled Risk Factors. You should read and
understand all of these risk factors before deciding to invest in our common
shares. The following are some of the risks an investment in us involves: 1.
We are a new company and have no operating history and are subject to the
business risks and uncertainties associated with any new business, including
the risk that we will not achieve our investment objectives. 2. While the
management team of FS Investment Advisor, LLC, our investment adviser (FS
Advisor), consists of the same personnel that form the investment and
operations team of FB Income Advisor, LLC (the adviser to Franklin Squares
first affiliated business development company, FS Investment Corporation), FS
Advisor is a new entity and has no prior experience managing a business
development company or a regulated investment company, or RIC. Therefore, FS
Advisor may not be able to successfully operate our business or achieve our
investment objectives. 3. Economic activity in the United States was impacted
by the global financial crisis of 2008 and has yet to fully recover. These
conditions may make it more difficult for us to achieve our investment
objectives. 4. Because there is no public trading market for our common
shares and we are not obligated to effectuate a liquidity event by a specified
date, it will be difficult for investors to sell their common shares. 5.
While we intend to conduct quarterly tender offers for a limited number of
our common shares pursuant to our share repurchase program beginning with the
first calendar quarter following the one-year anniversary of the date that we
raise gross offering proceeds of $2.5 million from persons who are not
affiliated with us or FS Advisor (the minimum offering requirement), we may
suspend or terminate the share repurchase program at any time. 6. The amount
of any distributions we make is uncertain. Our distribution proceeds may
exceed our earnings, particularly during the period before we have
substantially invested the net proceeds from this offering. Our
organizational documents permit us to pay distributions from any source,
including offering proceeds, borrowings or sales of assets. If we pay
distributions from sources other than our cash flow from operations, fewer
funds are available for investments and your overall return may be reduced.
7. We intend to qualify as a RIC but may fail to do so. Such failure would
subject us to federal income tax on all of our income, which would have a
material adverse effect on our financial performance. 8. As a result of the
annual distribution requirement to qualify as a RIC, we will likely need to
continually raise cash or make borrowings to fund new investments. At times,
these sources of funding may not be available to us on acceptable terms, if
at all. 9. We are subject to financial market risks, including changes in
interest rates, which may have a substantial negative impact on our
investments. 10. An investment strategy focused primarily on privately-held
companies presents certain challenges, including the lack of available
information about these companies. 11. Our investment policy is to invest,
under normal circumstances, at least 80% of our assets in securities of
energy and power companies. The revenues, income (or losses) and valuations
of energy and power companies can fluctuate suddenly and dramatically due to
a number of environmental, regulatory, political and general market risks,
which will impact our financial performance. 12. A significant portion of our
portfolio will be recorded at fair value as determined in good faith by our
board of trustees and, as a result, there will be uncertainty as to the value
of our portfolio investments. 13. We have not identified specific investments
that we will make with the proceeds of this offering, and therefore investors
will not have the opportunity to evaluate our investments prior to purchasing
our common shares. 14. We intend to invest primarily in income-oriented
securities of privately-held energy and power companies within the United
States, including small and middle market companies.We currently intend to
weight our portfolio towards senior and subordinated debt, but our portfolio
may also include select income-oriented preferred or common equity interests
that we believe will produce both current income and long-term capital appreciation.
The senior debt in which we invest will typically be secured by assets of the
issuing company. The collateral securing these investments may decrease in
value or lose its entire value over time or may fluctuate based on the
performance of the portfolio company which may lead to a loss in principal.
Subordinated debt investments are typically unsecured, as are preferred and
common equity interests, and this may involve a heightened level of risk,
including a loss of principal or the loss of the entire investment. 15. The
potential for FS Advisor to earn incentive fees under the investment advisory
and administrative services agreement may create an incentive for it to enter
into investments that are riskier or more speculative than would otherwise be
in our best interests, and, since the base management fee is based on gross
assets, FS Advisor may have an incentive to increase portfolio leverage in
order to earn higher base management fees. In addition, since GSO Capital
Partners LP, our investment sub-adviser (GSO), will receive a portion of
the advisory fees paid to FS Advisor, GSO may have an incentive to recommend
investments that are riskier or more speculative. 16. This is a best efforts
offering and if we are unable to raise substantial funds then we will be more
limited in the number and type of investments we may make. 17. FS Advisor,
its affiliates and GSO face conflicts of interest as a result of compensation
arrangements, time constraints, competition for investments, and affiliate
relationships, which they will attempt to resolve in a fair and equitable
manner, but which may result in actions that are not in our shareholders
best interests. 18. After meeting the minimum offering requirement, the
purchase price at which you may purchase common shares will be determined at
each semi-monthly closing date. As a result, such purchase price may be
higher than the prior semi-monthly closing price per share, and therefore
investors may receive a smaller number of common shares than if they had subscribed
at the prior semi-monthly closing price. 19. In the event of a decline in our
net asset value, the board of trustees may elect not to reduce our net
offering price per share. As a result, the purchase price may be materially
higher than the Companys current net asset value per share. 20. We may
borrow funds to make investments. As a result, we would be exposed to the
risks of borrowing, also known as leverage, which may be considered a
speculative investment technique. Leverage increases the volatility of
investments by magnifying the potential for gain and loss on amounts
invested, therefore increasing the risks associated with investing in our
securities. 21. Our portfolio investments, especially until we raise
significant capital from this offering, may be concentrated in a limited
number of portfolio companies, which would magnify the effect of any losses
suffered by a few of these investments.

Welcome to FS
Energy & Power Fund In todays world, we all rely on energy generated
from fossil fuels and alternative sources. It takes a vast network of
companies to locate, extract, process and deliver energy to end users. Many
are megabrands known across the globe. Beyond these huge enterprises, there
is a broad, diverse group of private and smaller public companies that play a
critical role in the energy cycle. There had been few opportunities for the
investing public to access private companies in this space... until now. FS
Energy & Power Fund, or FSEP, is a unique alternative investment fund
designed for the investing public that invests in the U.S. energy and power
industry. The fund is sub-advised by GSO / Blackstone1, a leading alternative
investment firm, and invests primarily in the debt and income-producing
equity securities of private companies involved in the vast domestic
infrastructure required to locate, produce and deliver energy and power. The
Funds investment objective is to generate current income and long-term
capital appreciation. It is universally accepted that demand for energy will
increase over time.The developed world has shown a never-ending appetite for
petroleum, natural gas and electricity. Over the past few years, the demand
from emerging economies has been significantly increasing as these countries
continue to modernize infrastructure, buy cars, heat and cool their homes and
acquire other energy-consuming products. In fact, the International Energy
Agency projects worldwide energy demand to grow 1.2% per annum from
2008-2035. Very few industries are able to project such stable growth with
such certainty. With this economic scenario, well-financed and well-run
companies will be positioned to succeed. Investing in FSEP is considered
speculative and involves a high degree of risk, including the risk of a
substantial loss of investment. Please see the section entitled Risk
Factors on the previous page and in FSEP's prospectus, as supplemented and
amended, to read about the risks that an investor should consider before
buying FSEP's common shares. FS Energy & Power Fund 1 1 GSO /
Blackstone or GSO refers to GSO Capital Partners LP. The International
Energy Agency projects worldwide energy demand to grow 1.2% per annum from
2008-2035. Mtoe 5,000 4,000 3,000 2,000 1,000 0 1990 2000 2008 2025 2035
History Projections Worldwide Energy Demand Source: International Energy
Agency (IEA), World Energy Outlook 2010. Mtoe is million tons of oil
equivalent. Oil Coal Gas Biomass Nuclear Other Renewables Hydro 1.2% Growth
Per Year IEA Prediction

The Energy
& Power Universe The energy and power industry is enormous,with
approximately 300 public and 13,000 private companies in the U.S. alone.
Below are the sub-sectors that make up the energy and power universe:
Upstream Upstream companies find, develop and extract energy resources, including
natural gas, crude oil and coal from onshore and offshore reservoirs.
Exploration  Production Midstream Once extracted, energy and its many
by-products are gathered, processed, stored and transported by midstream
businesses that own pipelines, gathering systems, processing plants and other
energy infrastructure. Pipelines  Storage  Shipping  Gas Processing
Downstream Energy is then processed through downstream companies that refine,
market and distribute to end users a variety of refined energy resources,
such as customer-ready natural gas, propane and gasoline. Oil Refining 
Gasoline Marketing  Retail Power Power companies generate, transmit and
distribute power and electricity to end users, and include producers of
alternative energy, like solar and wind power. Power Generation  Power
Transmission and Distribution  Alternative Energy Production Service &
Equipment Energy and power companies need support from the many service &
equipment businesses that supply specialized services and materials to aid in
every step of the energy lifecycle. Services for Oil/Gas Exploration 
Support for Power Industry 2 Investment Offering Introduction

The Investment
Opportunity FS Energy & Power Fund (FSEP) has a unique strategy that
differs from traditional funds focused on this industry for several reasons.
Portfolio diversification Expert asset management Flexible investment
platform Income orientation Infrastructure focus Access to private companies
FSEP invests primarily in income-oriented securities of private U.S.
companies in the upstream, midstream, downstream, power, and services &
equipment sub-sectors. It will seek established, stable enterprises with
strong cash flows and valuable assets. Because these companies are private,
information is limited and there are fewer investors with the proper
resources to analyze and invest in them. Private investments can be
attractive since less competition for these investments results in higher
return potential. FSEP will favor companies that form the backbone of the
industry by moving energy and power along the entire cycle from source to
consumer. These infrastructure players  involved in extracting, processing
and transporting energy  stand to gain as the volume of energy demanded
grows. The Fund will focus on investments that are expected to be insulated
from the volatility of commodity price swings, yet have the potential to
perform well under favorable industry trends, which may entail rising prices.
FSEP seeks to generate current income and long-term capital appreciation for
its investors. It attempts to balance the benefits of a relatively
conservative fixed income investment with the potential for growth in value.
FSEP primarily invests in income-oriented securities of private
energy-related companies, such as loans secured by the assets of the
companies in which it invests. In addition, the Fund will also hold carefully
selected equity investments that are judged to adequately protect against
downside scenarios while generating income and potential capital
appreciation. GSO, a subsidiary of the worlds leading alternative asset
manager, The Blackstone Group, carefully recommends the assets to be held by
the Fund. FSEP is the first and only energy-focused fund that enables the
investing public to benefit from GSOs extensive institutional-quality
expertise in energy and debt investing. From 2005 through 2010, funds managed
by GSO have invested approximately $7.5 billion in energy companies,
including approximately $4.9 billion in secured loans, $1.5 billion in bonds,
$1.0 billion in equity, and $100 million in bankruptcy claims. FSEP is
non-diversified as it will hold a concentration of investments in the energy
and power industry. However, historically investments in energy
infrastructure tend to have a low correlation with traditional asset classes,
like stocks and bonds. This low correlation adds diversification to a
portfolio, which helps smooth out returns and lower the portfolios overall
level of volatility. FS Energy & Power Fund 3

Risk Profile
Subordinated loans and corporate bonds introduce more risk since they are
behind senior secured loans in priority of payment and are not backed by
specific assets. Return Profile In return for junior status, unsecured loans
typically offer higher returns through higher interest rates and significant
return potential through possible ownership of warrants (a right that enables
a lender to purchase equity in the borrower at a predetermined price at some
time in the future). FSEP Strategy The Fund will generally target
subordinated loans with interest-only payments throughout the life of the
loan, with the principal due at maturity, as a means of enhancing return.
Borrowers must be strong companies with stable cash flows. Unsecured Debt
(Subordinated loans) Also known as subordinated debt, these are loans made to
private companies that are not secured by company assets. Unsecured debt is
junior, or next in line, to senior debt in priority of payment, though it
precedes equity. Most bonds issued by public companies are forms of unsecured
debt as well. Senior Secured Debt (1st & 2nd lien loans) Companies need
to finance projects that sustain business growth. Private companies commonly
turn to bank loans as a source of capital. A senior secured loan is a common
type designed to protect lenders against losses. It holds the distinction of
having a senior claim on a companys assets and cash flows should the company
experience problems meeting its financial obligations. Contracts are highly
structured and the value of an investment in a senior secured loan tends to
be less volatile than other investments. FSEPs Investments FSEP invests in a
mix of several different types of securities within the energy and power
universe with the goal of combining the stability and income of a debt
investment with the strong return potential and diversifying power of private
equity. Below are the Funds investment types ranked in the order of expected
portfolio concentration: Risk Profile Senior secured loans may be less risky
than other debt investments because they must be paid back first and they are
backed or secured by the companys assets, much like a home secures a
mortgage. As a result, they have lower loss rates than other obligations.
Return Profile Less risky investments tend to yield lower returns. However,
senior loans typically have floating rates so the interest payments move with
prevailing interest rates. In times when interest rates rise, investors are
protected from the declines in market value that affect traditional fixed
rate debt investments, like bonds and Treasuries. FSEP Strategy The Fund will
invest in senior debt as a means to manage risk and achieve current income. 4
Investment Offering Introduction

Risk Profile
Preferred equity holders face a higher risk than debt holders of losing their
investment should the companys value drop, but usually have a stated
liquidation value that will be paid before common equity in a stressed
scenario. Return Profile While preferred equity is subordinate to debt, it is
senior to common equity and may provide many of the return advantages of
common equity through conversion rights. Preferred equity holders may also
receive priority dividend and liquidation payments. FSEP Strategy The Fund
may invest in preferred equity of strong companies with steady business
models in order to enhance returns. Preferred Equity Preferred shares of
company stock receive priority of payment over common shares but are junior
to claims from debt holders. Holders of preferred equity can be entitled to
priority dividends and other benefits as compared to holders of common
equity. Risk Profile Equity investments are lower in the priority of payment
than the above investment types and do not have a stated maturity. Common
equity will be the first to lose value in circumstances where a companys
value declines. Return Profile The higher risk of an equity investment is
offset by its potential to provide a much higher return, depending on the
risk profile of the company. MLPs, as a more conservative example, typically
pay quarterly distributions, offering investors a current yield and the
opportunity for a more stable return profile than other forms of equity. FSEP
Strategy Selected equity investments will be utilized that generally pay
consistent, high-yielding dividends and have the potential to produce both
current income and long-term capital appreciation. Equity (Common equity, MLP
units) FSEP may also invest in common equity and other equity securities,
such as common units in Master Limited Partnerships. MLPs are
publicly-traded entities structured as limited partnerships or limited
liability companies that own and operate primarily midstream or upstream
energy assets. Other Investments Descriptions of these assets can be found in
FSEPs prospectus. In addition to the above, FSEP may invest in the
energy-related assets below when they are believed to serve to enhance the
risk-adjusted return of the overall Fund:  Net profits interests  Royalty
interests  Volumetric Production Payments  Project financing  Overriding
royalties  Warrants  Lease interests  Non-U.S. securities FS Energy &
Power Fund 5

Who Manages
FSEP? As shown here, there is a team of experts involved in managing FSEP.
Franklin Square Capital Partners oversees all aspects of operating and
distributing FSEP. Franklin Square specializes in bringing investment
strategies often used by institutions to the investing public and follows
industry-leading best practices that put investors interests first:  FSEP
intends to pay distributions exclusively from fully-earned returns, not from
the investor's own money.  All investments are transparent to investors and
will be reported in quarterly filings at their current market value. 
Franklin Square, GSO / Blackstone and their respective affiliates have
invested over $20 million of their own money in FSEP, thereby aligning their
interests with investors. The Funds adviser, FS Investment Advisor,
ultimately decides which investments to make for FSEP. The Funds sub-adviser,
GSO / Blackstone, identifies, analyzes and often originates the investments
for the Fund, subject to review and approval by FS Investment Advisor. FS2
Capital Partners, LLC (Member FINRA/SIPC), an affiliate of Franklin Square,
is responsible for distributing shares of the Fund to broker-dealers and
their clients. Franklin Square brings strategies used by institutions to the
investing public 6 Investment Offering Introduction GSO / Blackstone FS
Investment Advisor FS Energy & Power Fund Sponsor Investment Adviser
Sub-Adviser The Fund Dealer Manager

Exclusivity
Expertise Scale Being one of the largest managers in the private debt space
means that GSO can offer FSEP investors access to opportunities few other
managers can. Its size and relationships often help GSO structure new private
deals with advantageous terms. GSO, with over 180 employees, has a strong
reputation for the care it takes in analyzing investments and the companies
behind them. FSEP utilizes GSOs knowledge of the energy industry and the world
of private debt and equity investing to pursue above-market returns for the
Funds investors while seeking to keep risk of principal loss to a minimum.
In 2008, GSO / Blackstone partnered with Franklin Square as the exclusive
distributor of its debt products to the investing public through the
independent broker-dealer network. GSO / Blackstone brings FSEP investors
several advantages, namely: FS Energy & Power Fund 7 Blackstone is one of
the worlds largest, most respected alternative asset managers. Since 1985,
it has served some of the largest and most sophisticated investors across the
globe, including many state and corporate pension funds, financial
institutions, endowments, sovereign wealth funds and high net worth
individuals. It manages private equity, real estate, debt and other highly
specialized investments. Blackstones credit business, GSO Capital Partners
LP, ranks among the worlds largest credit-oriented alternative asset
managers. At year-end 2010, its assets under management totaled approximately
$30 billion. Corporate Pension 11.7% Sovereign Wealth Funds 9.3% Private -
High Net Worth/Family Office 6.7% Blackstone and its Employees 6.5%
Foundations/Endowments 5.5% Fund of Funds 5.4% Foreign Plan Assets 2.9% Union
0.7% Financial Institution 14.7% Public Pension 36.7% Blackstones Investors
by Category Source: The Blackstone Group, www.blackstone.com

A BDC Provides
Access Historically, huge amounts of capital were required in order to access
the world of private debt and equity. Fortunately, FSEP was established as a
non-traded Business Development Company or BDC. A BDC allows investors of
all kinds to invest in the same types of non-traded assets as large
institutions, but at a low minimum initial investment ($5,000 for FSEP). BDCs
are highly transparent investment funds that are registered with the SEC and
regulated under the Investment Company Act of 1940. An independent custodian
holds all assets, and for complete transparency, FSEP investors will be able
to see whats in the portfolio through regular public filings with the SEC.
See the prospectus for more on BDCs. 8 Investment Offering Introduction
Institutions Individuals BDC Private Equity & Debt Investments Criteria
for an FSEP Investment When GSO and FS Investment Advisor consider an
investment for FSEP, they look for established companies they believe will
generate high total returns while keeping the risk of principal loss to a
minimum. Generally, these will be upstream, midstream, power, and services
& equipment businesses that possess the following characteristics:
Defensible Market Position Is among the leaders in its sub-sector Strong
Management Has experienced leadership and a proven track record
Diversification Provides the total portfolio diverse exposure within the energy
industry Commodity Price Management Minimizes exposure to swings in market
prices for energy Solid Assets Has strong cash flow and hard, valuable assets
to back its debt and equity value

Common
Questions about the Offering How do I know if this fund is right for me? The
investment goal for FSEP is to generate current income and long-term
appreciation by investing in income-producing debt and equity securities of
energy and power companies. Investors need to read the prospectus and
determine if these goals fit into their overall investment strategy before
subscribing to the Fund. Who can invest in FSEP? FSEP is a long-term
investment for persons of adequate financial means who have no need for
liquidity in their investment. To invest in the Fund, an investor must have
either (i) a net worth of at least $70,000 and an annual gross income of at
least $70,000, or (ii) a net worth of at least $250,000. Some states, such as
Kansas, impose higher suitability standards. Please consult the prospectus for
details. What is the price of a share and the minimum investment? The initial
offering price of FSEP is $10.00 per share, which is subject to the terms of
the offering and may change over time as the value of the underlying
portfolio changes. The minimum investment is $5,000 per individual.
Additional purchases are available in increments of $500. The investment
minimum for subsequent purchases does not apply to shares purchased through
the Funds distribution reinvestment plan. How often are distributions paid?
Distributions are declared on a semi-monthly basis and paid on a monthly
basis, subject to the discretion of the Board of Trustees and as described in
the prospectus. Can I reinvest my distributions? Yes, the Funds Distribution
Reinvestment Program allows you to use your distributions to purchase shares
at 95% of the current public offering price. How long will I have to invest
in FSEP? FSEP is not publicly traded and was not designed for investors who
expect to liquidate their holdings quickly. Similar to private equity
investments made by institutional investors, Franklin Square believes this
structure is more appropriate for the long-term nature of the assets in which
it invests. To provide shareholders with limited liquidity, the Fund intends
to conduct quarterly tender offers under its share repurchase program
beginning with the first calendar quarter following the one-year anniversary
of the date on which it meets its minimum offering requirement. We intend to
seek a complete liquidity event for our shareholders within five years
following the completion of our offering stage (that is, after 150 million
shares have been issued). A liquidity event could include the listing of the
Fund on a public exchange, the sale of all or substantially all of our assets
followed by a final distribution to our investors or a merger or other
transaction where our investors would receive cash or shares in a publicly
traded company. However, there can be no assurance that we will be able to
complete a liquidity event. FS Energy & Power Fund

This is neither
an offer to sell nor a solicitation of an offer to buy the securities
described herein. An offering is made only by the prospectus. This sales and
advertising literature must be read in conjunction with the prospectus in
order to fully understand all of the implications and risks of the offering
of securities to which the prospectus relates. A copy of the prospectus must
be made available to you in connection with this offering. FS2 Capital
Partners, LLC | 2929 Arch Street, Suite 675 | Philadelphia, PA 19104
877-372-9880 | www.fs2cap.com | Member FINRA/SIPC Franklin Square Capital
Partners is not affiliated with Franklin Resources/Franklin Templeton
Investments or the Franklin Funds. www.fsenergyandpowerfund.com Access to a
Pipeline of Energy and Power Investments